On Sin Tax: Raise direct taxes rather than consumer taxes –IBON

Research group IBON said that the passing of the Sin Tax Reform Bill made the country’s tax system more regressive by increasing consumer taxes that burden the poor while cutting income tax and corporate tax that make the rich even richer.

As part of the government’s tax reform agenda, Senate Bill No.2233 or the Sin Tax Reform Bill was recently passed that imposed Php45 excise increase per pack on tobacco products in 2020, followed by Php5 hikes until the excise reaches Php60 per pack in 2023, and an annual 5% increase thereafter.

IBON emphasized that the Sin Tax Reform Bill takes advantage of poor Filipinos’ consumption of tobacco products to generate revenues, instead of taxing wealthier Filipinos who can better afford higher taxes. 

While richer Filipinos consume more tobacco compared to poorer ones based on the latest Family Income and Expenditure Survey (FIES), the latter spend a greater percentage of their small incomes on tobacco, added IBON.

IBON recalled that Senate passed TRAIN Package 1 that imposed higher consumer taxes on petroleum products and tobacco while reducing personal income tax.

IBON said that with TRAIN, the richest 1% of Filipino families with incomes of Php1.5 million or more a year will have an average of Php100,000 to over Php300,000 additional take-home pay annually especially when income taxes are lowered further in 2023.

This is on top of how the rich will pay billions of pesos less in estate and donor taxes.

The 17.2 million poorest Filipino households do not benefit from lower personal income taxes, but all pay higher consumer taxes, explained IBON.

The Duterte government aims to use the Sin taxes collected from Filipinos to augment the Php62 billion funding gap needed for the Universal Health Care (UHC) Law.

But IBON said that the said law would only further fund the privatization of healthcare in the country.

UHC would divert government funds to create supplementary coverage by private health care providers such as private health insurance and Health Maintenance Organizations (HMOs) as well as provide network-based licensing, contracting, and accreditation of health facilities.

In the end, IBON said that consumer taxes such a petroleum, tobacco, and even alcohol excise are welcome only if there is a progressive tax system in place with high direct taxes and lower consumption taxes.

However, the Duterte administration’s tax reform agenda is doing the opposite by shifting the tax burden from the rich to the poor and ensuring private profits rather than public health. #

Sin taxes, UHC to fund privatization of health services–IBON

Research group IBON said that government must allot a higher budget for public health services rather than fund private health providers through the Universal Health Care (UHC) Act.

Also known as Republic Act (RA) 11223, the UHC Act ostensibly aims to provide all Filipinos with promotive, preventive, curative, rehabilitative, and palliative health services “without causing financial hardship”, and prioritizes Filipinos who cannot afford such services.

The UHC would need Php257 billion in its first year of implementation.

The sin tax reform law on the other hand is allegedly intended to augment the funding gap of around Php62 billion in the first year alone.

But IBON observed that the UHC would use government funds to create supplementary coverage by private health care providers such as private health insurance and Health Maintenance Organizations (HMOs) as well as provide network-based licensing, contracting, and accreditation of health facilities.

This further privatizes health services, the group said.

The UHC, IBON explained, stipulates that Filipinos would automatically be enrolled in PhilHealth or the National Health Insurance Program (NHIP) either as a direct contributor who would pay premiums or as an indirect contributor.

Moreover, the NHIP would have an increase in membership rate by 0.5% annually to fund the UHC.

The group observed that this is not as socialized as it appears to be, as high-income individuals would contribute the same percentage of their salary as low-income earners.

Also, IBON noted, to ensure that basic accommodation services are met, UHC states that government hospitals would operate not less than 90% of their bed capacity as basic accommodation, not less than 70% for specialty hospitals, and not less than 10% for private hospitals.

However, IBON observed that hospital beds in the country are not enough to begin with.

The World Health Organization (WHO) recommends 20 beds per 10,000 population.

The Philippines has never reached the recommended ratio, the group said, and this indicator even worsened from 14.4 beds per 10,000 population in 1990 to only 9.9 beds per population in 2014.

The number of government hospitals even fell from 732 in 2011 to 423 in 2015.

Moreover, said IBON, the UHC assures that a National Health Human Resource Master Plan would be formulated to ensure the provision of health programs and services through a guaranteed permanent employment and competitive salary of all health professionals and health care workers.

Yet for every 10,000 population the country had only 0.3 government physician and 0.6 public health nurse in 2017.

Despite the scarcity of government health workers, data from the Philippine Overseas Employment Administration (POEA) show that the country has been exporting nurses for decades, which is worsening the brain drain of the health sector, observed IBON.

The Philippines deployed 19,551 nurses in 2016 or 53 nurses per day.

IBON emphasized that the UHC is the continuation of the privatization and commercialization of health services of previous administrations, from the Health Sector Reform Agenda of the Estrada administration, Fourmula One for Health of the Arroyo administration, and Aquino’s own UHC agenda.

These programs advance less government and more private role in healthcare, making provision of health services less direct and more insurance-driven thus prioritizing private profits over public health, said IBON

2019 midterm elections results: Harsher policies ahead

Administration-backed bets dominated the 2019 midterm elections especially in the Senate. The Duterte administration will certainly fast track its priority neoliberal policies as soon as the 18th Congress opens. It already used its super-majority in the 17th Congress to pass socioeconomic measures aggravating the country’s jobs crisis, poverty, and underdevelopment. More and harsher ones loom with many elected officials unlikely to favor any policy reversals from neoliberalism.

Questionable results

The electoral success of administration-backed candidates and party-list groups was controversial. The 2019 midterm elections were marred by massive vote-buying, widespread breakdown of voting machines, and suspicious delays in the transmission of results. The Duterte administration also visibly used public resources not just to support its preferred candidates but also to sabotage the campaigns of its opposition. Progressive candidates, party-list groups, and their supporters were subjected to particularly virulent attack.

Duterte-endorsed Hugpong ng Pagbabago (Faction for Change) candidates took nine of 12 senatorial slots: Cynthia Villar, richest senator and wife of the country’s richest oligarch; Taguig representative Pia Cayetano; reelectionist senator Sonny Angara, son of the late senator Ed Angara; reelectionist and former senate president Koko Pimentel, son of former senator Aquilino Pimentel; Special Assistant to the President Christopher “Bong” Go; former chief of police Ronald “Bato” dela Rosa; Imee Marcos, eldest daughter of ousted dictator Ferdinand Marcos; jailed plunderer former senator Ramon “Bong” Revilla; and former Metro Manila Development Authority (MMDA) chief and presidential political adviser Francis Tolentino.

Many winning party-list groups are either linked with or outrightly backed by the administration: the Sara Duterte-backed Anti-Crime and Terrorism Community Involvement and Support (ACT-CIS) party-list; Duterte ally Gloria Arroyo-backed AKO Bicol Political Party (AKB); richest multi-billionaire congressman Michael Romero’s One Patriotic Coalition of Marginalized Nationals (1 PACMAN); Ilocos Norte warlord Rudy Farinas’ Probinsyano Ako; and Duterte-endorsed Marino, whose nominees are Davao-based businessmen. Election watchdog Kontra Daya described these groups as ”dubious and making a mockery of the party-list system”.

Meanwhile, the Makabayan bloc of progressive party-list groups defied systematic state-sponsored attacks and vilification to take six seats in the 18th Congress, only one less than it got in the last elections. Bayan Muna (BM) obtained over 1.1 million votes to get three seats for the first time since 2007. Gabriela Women’s Party (GWP), ACT Teachers Party, and Kabataan Party-list all won one seat each. The last member of the bloc, Anakpawis, whose farmer- and worker-dominated machinery suffered violent attacks and killings however failed to retain its seat in the House of Representatives (HOR).

The systematic state-sponsored attacks on progressive candidates and groups to prevent them from being elected into government exposes the flawed democracy of Philippine elections. Military, police and local government officials vilified Leftist candidates, sabotaged their campaigns and political alliances, and attacked their party-list machinery. This is another manifestation of government’s intolerance of activists advocating for genuine change and raising public awareness on issues and proposing genuine solutions.

Looming sell-out and repression

The overwhelming number of winning candidates are from the same political parties, political families and elite interests behind the system of anti-people and anti-development laws in the country. They are likely to reprise or keep on with more of the same to the further detriment of the economy.

Among the exclusionary measures passed by the 17th Congress under the Duterte administration is the Tax Reform for Acceleration and Inclusion (TRAIN) law, which lowered personal income, estate, and donor taxes on the rich while burdening the poorest majority with higher consumption taxes. Another measure is the Rice Tariffication Law which liberalized rice trade, making the country over-reliant on a narrow global market for its staple food, amid still merely token production support for millions of rice farmers. There is also the extension of Martial Law in Mindanao, despite the Commission on Human Rights (CHR) already noting rampant human rights violations in the region.

Senate president Vicente Sotto III said that the Senate will take up amendments to the Public Services Act (PSA) and the Human Security Act (HSA) in the closing days of the 17th Congress until June. The amendments to the PSA open critical public utilities such as power, telecommunications, and transportation to excessive foreign ownership and control. This compromises national security and civil defense, on top of making vital public services expensive and inaccessible especially for lower income families.

Amendments to the HSA meanwhile threaten to further restrict civil liberties and human rights. As it is, the Duterte administration is already coming down hard on supposed drug personalities and alleged ‘terrorists’ and supporters in gross disregard of due process and the law. Critics fear that HSA amendments will only give the government freer hand to crack down on the political opposition and other perceived threats to its rule.

The electoral results will also likely embolden the Duterte administration to push for Charter change (Cha-cha) serving its narrow political agenda. Amendments to the 1987 Philippine Constitution focusing on federalism and full economic liberalization remains priority legislation for the Duterte government.

From the time of Fidel Ramos to the current administration, various efforts for Cha-cha were consistent in seeking to lift restrictions on foreign exploitation of natural resources and on foreign ownership of land, public utilities, education institutions, and mass media and advertising . The rationale is that attracting foreign investments will supposedly be the key for economic development.

The same rationale is behind other bills considered important by Malacañang pending in Senate committees, such as the National Land Use Plan, supposed contractualization ban, and the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO). Aside from pushing PSA amendments, the National Economic and Development Authority (NEDA) reportedly also plans to recommend the following to the Legislative-Executive Development Advisory Council (LEDAC): sugar industry liberalization, creating a Department of Water, and exempting government’s line-itemized projects from the election ban.

All these seek to make it easier to do business and profit from public utilities, land and natural resources, and building infrastructure. The TRABAHO bill is also a misnomer because its real focus on lowering corporate taxes and rationalizing incentives may, if anything, actually even squeeze employment and workers’ salaries. Even the supposed law ending contractualization may end up being a smoke-screen that creates the conditions for legitimizing contractual arrangements rather than ending this.

Instead of bringing development, Cha-cha and the rest of the Duterte administration’s priority bills are likely to worsen the effects of the business-biased, neoliberal policies of the past decades. The economy today is characterized by shrinking agriculture and Filipino manufacturing, dismal jobs generation, and chronic poverty. This cannot be cured by further opening up to foreign capital and without the state more actively intervening in the economy for strategic industrial development, redistributing income and wealth, and providing needed social services.

Keeping watch

The executive, legislative, and judicial branches of government are overpopulated by administration allies or otherwise intimidated into passivity. The manufactured results of the midterm polls strengthens the hand of the Duterte administration and its elite supporters to implement self-serving economic and political measures at the expense of the Filipino public.

More than ever, the country’s patrimony and sovereignty and the people’s rights and welfare are at stake.

Also more than ever, the steadfast resistance of organized basic sectors is critical. The decades-strong social movement is the most reliable bulwark against the distortion of the economy to serve narrow elite interests. The progressives in Congress and their allies in government, down to the local level, can help push an alternative economic agenda. Domestic agriculture and Filipino industry can be developed, the environment protected, people’s welfare upheld, and economic independence attained. – With report from Casey Salamanca

Slower economy affirms undue hype over credit rating upgrade

Slower gross domestic product (GDP) growth during the first quarter of 2019 belies any claim of a healthy Philippine economy.

Research group IBON stressed that the Duterte administration’s enthusiasm over the recent credit rating upgrade that the country got is unwarranted.

Instead of hailing business-biased programs, government should look to more sustainable undertakings in order to push genuinely inclusive economic growth.

The Philippine Statistics Authority (PSA) reported that Philippine GDP grew at its slowest in 16 quarters at 5.6% in the first quarter of 2019 since the 2015 first quarter GDP growth rate of 5.1%.

This is slower than the 2018 first quarter GDP growth of 6.5 percent.

Trade and repair of motor vehicles, motorcycles, personal and household goods and financial intermediation were the drivers of the first quarter growth with faster rates, but the rest of the economic sectors slowed down.

Agriculture had stagnant growth in the last three years, while manufacturing and real estate registered the slowest first quarter growth in the past decade.

News of the economy’s slower growth came at the heels of a credit rating upgrade of BBB+ from Standard & Poor’s, which the Duterte administration attributes to its economic reforms.

The administration’s economic team is also hopeful that with the credit rating upgrade the country could encourage and attract more foreign investments.

IBON however said that the slowdown proves the Duterte administration’s economic centerpiece to be unsustainable, all the more rendering the credit rating upgrade to be meaningless.

The unsustainability of the infrastructure program, Build Build Build, IBON pointed out, was underscored by the slowdown of the construction and real estate sectors, which the National Economic and Development Authority (NEDA) attributed to the delayed enactment of the 2019 national budget.

Construction slowed significantly to 3.9% in the first quarter of 2019 from 10.2% in the same period last year.

A closer look reveals that public construction nosedived from 22.6% to -8.6% during the same period.

Private construction, meanwhile, was slightly faster from 8.1% to 8.6% within the same period, however registering a substantial slowdown from 19.3% in the fourth quarter of 2018.

Real estate, renting and business activities continued its slowdown from 8.7% in the first quarter 2016 to 4.1% in the first quarters of 2019.

IBON added that the budget delay, which reportedly stifled government spending as agencies were compelled to operate on a reenacted 2018 budget, even puts government’s determination for rapid growth into question.

Any government that is solid on its development vehicle, in this case, an ambitious infrastructure program, would not waste time to promptly allocate the needed budget for it, said the group.

IBON said that instead of focusing on the infrastructure program to boost GDP growth, loans, investments, and even employment, government should exert greater efforts towards sustainable sources of inclusive growth.

The group noted that contrarily, the country’s production sectors are stagnant or on a continuous slowdown.

IBON noted that growth in agriculture, fishery, and forestry fell to 0.8% in the first quarter of 2019 from an already negligible 1.1% in the first quarter of 2018.

Manufacturing slackened further to 4.6% from 7.3% in the same period.

Agriculture registered 1.7 million jobs lost from January 2018 to January 2019, the largest contraction of agriculture jobs across all January rounds post-Marcos administration.

Manufacturing created only 110,000 jobs in the same period, only a fourth of the seasonal jobs created in construction.

IBON reminded that government’s bid for the pro-business Build Build Build and for foreign investments will not bring long-term benefits to the country unless accompanied by a solid agriculture and industry centered development plan.

Without boosting the country’s production base, sustainable and inclusive economic growth will remain elusive, said the group. #

Group challenges Senate: Stop Charter change

Research group IBON is challenging the succeeding Senate to prove its independence by rejecting the proposal to amend the 1987 Philippine Constitution or Charter change (Cha-cha). Lawmakers should keep in mind the dangers that Cha-cha poses on Philippine economic sovereignty, said the group, and not be swayed into passing other laws that fulfill the consistent goal of Cha-cha to open the economy to full foreign participation.

In December last year, the Lower House transmitted its approved, consolidated version of proposed constitutional amendments, Resolution of Both Houses (RBH) 15, to the Philippine Senate. Aside from establishing a federal state and removing term limits, Cha-cha would implement neoliberal amendments to the Philippine constitution.

IBON said that while RBH 15 expires on June 30 this year, the Duterte government has sustained its espousal of Cha-cha by organizing an Inter-Agency Task Force on Federalism and Constitutional Reforms and can easily restart or expedite deliberations under an administration-dominated 18th Congress.

Partial unofficial tallies show a majority win for candidates backed by the Duterte administration, IBON noted. An administration win can bring standing Upper House support for Cha-cha to 11 comprised of incoming senators Bong Go, Ronald dela Rosa, Pia Cayetano, Imee Marcos, Francis Tolentino, Sonny Angara, Aquilino Pimentel III, Bong Revilla, plus incumbent senators Vicente Sotto III, Juan Miguel Zubiri, and Manny Pacquiao.

IBON stressed that Cha-cha would strike out the nationalist provisions of the constitution and liberalize the economy to foreign investors. Moreover, said the group, Cha-cha will limit government’s role in protecting the Philippine economy and allow foreign ownership of natural resources, educational institutions, mass media and advertising, public utilities, and strategic enterprises.

The proposed amendments also remove pertinent provisions affecting Philippine employment opportunities, labor rights, and access to basic social services.

Cha-cha would remove provisions on using the preferential use of Filipino labor and limiting professions to Filipinos, noted IBON. This will worsen the country’s jobs crisis. For instance, more Filipinos go abroad for work than new jobs are created locally. In the first semester of 2018, the average number of Filipinos who went abroad for work daily was 5,757, while only 2,263 new jobs were created on average per day during the same period, said IBON.

The group added that important stipulations on labor rights such as security of tenure, humane conditions of work, and a living wage, are deleted in the proposed Cha-cha. Already, IBON observed, 2018 data shows that 8.5 million workers of private companies and 985,000 workers in government agencies are still non-regular workers. Meanwhile, the Family Living Wage (FLW) as of March 2019 is at Php1,004 for a family of five compared to which the National Capital Region’s (NCR) minimum wage of Php537 falls short.

The proposed Cha-cha also narrows government’s role in providing basic social services such as health development and affordable housing by adhering to the neoliberal policy of privatization, IBON said.

The group further warned that proposals to open public utilities to full foreign ownership such as proposed amendments to the Public Services Act (PSA), and to increase areas that are open to foreign investments such as through revisions to the foreign investments negative list (FINL), are in the works and ground breaking the eventual neoliberalization of the highest law of the land. IBON said that legislative amendments such as these are being prioritized by government and will serve the same purpose of opening the economy for big business and foreign profit-seekers. Nationalists and people’s rights defenders among the country’s lawmakers, if there are any left standing, should be vigilant against these moves.

IBON pointed out that the midterm elections are fast concluding with incredible results that will be favorable to the Duterte administration’s neoliberal legislative agenda. The Filipino people have reason to doubt that the passage of Cha-cha and other laws surrendering national patrimony will not be as ‘magical’ as the election results, IBON added. This will be so unless nationalists and people’s rights advocates shall continue to challenge the Philippine legislature.#

WANTED: An Independent Senate

By Jose Lorenzo Lim

Midterm elections have always been crucial for any incumbent, as results will either affirm or reject the programs and policies so far of the ruling party. The 2019 midterm elections, however, appears to be different, as it happens at the heels of the Duterte administration’s implementation of harshest neoliberal economic policies and undermining democracy. The Duterte presidency has seemingly consolidated the Executive, Lower House and even the Judiciary under its influence, and the Senate could be the last stronghold of democratic processes.

After weeks of campaigning, the 2019 midterm elections is near. Candidates vying for senatorial posts have traveled around the country seeking to convince Filipinos to vote for them. It remains to be seen whether or not we will have a truly independent senate after the May 2019 elections.

Quick voters scan

Looking at data from the Commission on Elections (COMELEC) shows that there are 61,843,750 voters in the Philippines with an additional 1,822,173 registered overseas voters for the 2019 midterm elections.

A breakdown of the voters shows that Region IV-A has the highest number of voters with 14%, followed by Region III with 11%, and the National Capital Region (NCR) with 11.4 percent. The Cordillera Administrative Region (CAR) has the lowest number of voters with only 1.6% share of the total number of voters. The poorest regions also have a low number of voters. Both Region IX and the Autonomous Region in Muslim Mindanao (ARMM) only have 3.5% of the total number of voters.

For overseas voters, the Middle East and African regions have the highest number of voters with 48.7%, while the European region has the lowest share of voters with only 10.2 percent. 

While the huge number of voters does not automatically translate into voter turnout, in 2016 the country had an 84% voter turnout compared to 2013 with 77.3% and 2010 with 74.9 percent. Unsurprisingly, a high voter turnout can also be an indicator of dubious activities like flying voters.

Finding the right candidate

Instead of dancing around and telling rehearsed jokes repeatedly, what does IBON think candidates should stand for to deserve the Filipinos’ vote in the upcoming elections?

First, candidates should adhere to the advancement of socioeconomic strategies. Filipino industries should be protected and supported instead of allowing foreign companies to dominate the Philippine economy. An example is protecting and promoting the agriculture sector through production and price supports instead of flooding the market with imported agricultural goods, as is the rationale behind the Rice Tariffication Law, to lower inflation.

Candidates interested in genuinely effecting long-term reforms for the country’s production sectors should support genuine agrarian reform. The failure of the Comprehensive Agrarian Reform Program (CARP) to redistribute land to the tillers has only intensified landgrabbing and land use conversions for land market speculation. Department of Agrarian Reform (DAR) records show that as of January 2019, there were still 549,920 hectares that need to be acquired and distributed. From 1988 to 2016, meanwhile, 98,939 hectares of land were approved for conversion while 120,381 hectares were approved for exemption from land reform coverage–but this is a conservative count as the real extent of land conversion may be underreported. After CARP, majority of so-called agrarian reform beneficiaries still do not own the land awarded to them or are in the process of being dispossessed because they are failing to amortize.

Third, candidates should be upholding people’s rights and welfare. Candidates should be firm in ending contractualization. It is still very much in place: Employment data shows that in 2018, 8.5 million workers of private companies and 985,000 workers in government agencies are still non-regular workers.

Additionally, legislating a national minimum wage of Php750 should also be a major agenda. Raising the average daily basic pay (ADBP) of Php401 nationwide to Php750 will in turn add Php7,649 to employees’ monthly income and Php99,432 to their annual income (including 13thmonth pay). This will cost the 35,835 establishments nationwide just Php465 billion or only 21.5% out of their Php2.16 trillion in profits.

Moreover, Republic Act (RA) 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law should be repealed instead of taking out taxes especially from petroleum products which are socially sensitive. TRAIN means less money in the pockets of 8 out of 10 Filipinos as only 5.5 million Filipino families benefit from lower personal income taxes (PIT) while the remaining 17.2 million poorest households do not benefit from PIT but all pay higher consumer taxes.

Candidates should also ensure that basic social services will be accessible to every Filipino. That is why there is a need to build more public schools and public hospitals aside from allotting higher budgets to education and health. But 2019 budget for the Department of Health (DOH) for instance was cut by 8.13% compared to last year.

Lastly, candidates should promote environmental sustainability. For example, a candidate should be firm to stop destructive large-scale mining, as this causes irreparable damage not only to the country’s natural resources but to many indigenous communities. Another part of this is encouraging rational consumption. Our resources are finite – what we produce and consume must only be within our needs. Candidates should also promote an environment-friendly agriculture and industry.

The public has heard the candidates’ stances on various pertinent issues such as the TRAIN Law, Rice Tarrification Law, contractualization, and jobless growth. Now the candidates should bear in mind that whatever promises they made during the campaign period would be remembered by the people, who will hold them accountable when they take their posts this June 2019.

The last stand

The new senate should carry out the task of defending the current constitution against the Duterte administration’s push for federalism, neoliberalism, and self-serving political goals. The most consistent is the intent to fully liberalize the Philippine economy for foreign investors.

Relatedly, pending proposed amendments to the Human Security Act (HSA) aim to prevent critics, thereby putting basic human rights and civil liberties in peril. The HSA could expedite terrorist tagging and linking and subsequent surveillance, arrests, and restricting of legitimate people’s movements. The new senate should stand against this creeping authoritarianism.

The Philippine Senate could be the last democratic institution for the government’s checks and balances, independent of and not beholden to the power ambitions of the presidency and expected to side with the people and defend whatever remains of Philippine democracy, people’s rights and welfare, and the country’s sovereignty.

With all these considered, the 2019 midterm elections could be one of the Filipinos’ last stands for freedom and democracy. Depending on how their favorite candidates have explained these to them, they can now vote wisely. #

Employers can afford Php750 minimum wage—IBON

Employers can very well afford to raise the minimum wage to Php750 which only entails a small cut in their profits, research group IBON said.

The Rodrigo Duterte administration should support this hike which will help millions of Filipino households dependent on wages and salaries cope with the rising cost of goods and services, said the group.

Current minimum wages are far from IBON’s estimate of the family living wage (FLW) needed by a family of five.

The current minimum wage in the National Capital Region (NCR) of Php537 is already the highest in the country, but it is Php467 short of the Php1,004 FLW as of March 2019.

IBON said that raising the minimum wage to Php750 will significantly raise the incomes of Filipino workers.

The group’s computations also show that employers can afford to increase the minimum wage they pay to Php750.

In the NCR, raising the average daily basic pay (ADBP) of Php562 to Php750 will add Php4,095 to the monthly income and Php53,231 to the annual income (including 13th month pay) of employees.

IBON pointed out that this will only cost Php115 billion out of the Php1.17 trillion in profits of the 14,414 establishments in NCR, which is equivalent to just 9.8% of their profits.

Raising the ADBP of Php401 nationwide to Php750 will in turn add Php7,649 to employees’ monthly income and Php99,432 to their annual income (including 13th month pay).

This will cost the 35,835 establishments nationwide just Php465 billion or only 21.5% out of their Php2.16 trillion in profits, as per IBON computations.

The group stressed that meaningful wage hikes are doable if only companies were willing to accept a small cut in their profits.

IBON also pointed out that raising wages will not be inflationary if companies share a little more of their profits with workers instead of passing the wage hike on to consumers as higher prices.

These were estimated using the latest Annual Survey of Philippine Business and Industry (ASPBI) data of the Philippine Statistics Authority (PSA) for enterprises with 20 or more workers.

IBON however underscored that the government can help micro, small and medium enterprises afford the wage hike by providing them tax breaks and incentives, cheap credit, subsidized utilities, and technology and marketing support.

The growing productivity of Filipino workers is among the main drivers of economic growth and they deserve a significant wage increase, IBON said.

The richest individuals and biggest corporations in particular have more than enough for granting wage increase.

It is the government’s responsibility to ensure that workers get a fairer share of the gains from economic growth rather than have these gains concentrated in the hands of a few, concluded IBON.#

Workers left behind in growing economy under Duterte administration

Wages of workers in the National Capital Region (NCR) continue to fall even as their growing labor productivity drives economic growth under the Duterte government, research group IBON said.

The mandated minimum wage is not even keeping up with the rising cost of living for ordinary Filipinos, the group revealed, adding that keeping wages low distributes wealth unevenly and worsens inequality.

The Philippine economy is slowing but real gross domestic product (GDP) still grew 6.7% in 2017 and 6.2% in 2018.

The regional GDP of NCR grew 6.2% and 4.8% in that same period, registering a total increase of 11.3% between 2016 and 2018.

In NCR, this economic growth was most of all driven by rising labor productivity. Labor productivity in NCR, measured by regional GDP divided by total employed, increased from Php568,092 per worker in 2016 to Php640,125 in 2018 or a total increase of 12.7% between 2016 and 2018.

These are IBON estimates using the latest available data from the Philippine Statistics Authority (PSA).

Yet despite rising labor productivity, the NCR real minimum wage is actually falling under the Duterte administration.

Measured at constant 2012 prices, this fell from Php467 in July 2016 to just Php457 in March 2019.

The Php46 worth of wage hikes since 2016 have been more than off-set by inflation and the continually rising costs of goods and services especially last year.

IBON also pointed out that the wage gap, or the difference between the minimum wage and the family living wage (FLW), is growing wider under the Duterte administration.

The NCR nominal minimum wage of Php491 in July 2016 was only 54.6% of the Php900 FLW for a family of five at the time.

Today, the NCR minimum wage of Php537 is just 53.5% of the Php1,004 FLW for a family of five.

The wage gap is even wider for a family of six where the NCR minimum wage is just 44.6% of the required Php1,205 FLW.

The research group said that real wages falling even further behind economic growth is worsening the elitist and exclusionary character of the economy.

Moreover, improving labor productivity is not translating to benefits for the working people but is instead going to bloating corporate profits and oligarch wealth.

The people are left to struggle with the rising costs of their food and non-food needs.

IBON stressed that the Duterte government is very much in a position to change this situation.

Among the most important measures is ensuring sufficient incomes for workers by legislating a national minimum wage of Php750.

IBON’s estimates using the latest available data, for 2016, show that a Php750 minimum wage in NCR will only cost 9.8% of the profits of establishments and still leave them with Php1.17 trillion in profits.

The increase in welfare for millions of workers and their families will however be palpable.#

Don’t insist on low poverty threshold, address jobs crisis, gov’t told

The National Economic and Development Authority (NEDA) recently attributed reduced poverty in the first semester of 2018 to the rising quality of jobs under the Duterte administration.

But research group IBON said that dismal jobs creation, the magnitude of joblessness, poor quality work, and meager wages give away the true picture of Philippine poverty.

The group stressed that government needs to first admit that there is a jobs problem to embark on real solutions to poverty.

Very weak job creation indicates an economy in crisis that deprives people of livelihoods, IBON said.

Job generation in the first two years of the Duterte administration was the worst in six decades and nine administrations.

Employment grew by an annual average of only 0.2% in in 2017 and 2018 compared to the 1.6%-3.9% annual average under the administrations since the time of Diosdado Macapagal in the 1960s.

IBON added that the persistence of joblessness and underemployment, where even those employed seek additional work, underscores the inability of the economy to generate enough stable and decent work.

The group estimates the unemployment rate to have grown from 9% in 2016 to 10.3% in 2017 and 9.9% in 2018.

In 2018, IBON estimates 4.6 million unemployed and 6.7 million underemployed Filipinos.

IBON also underscored that wages remain far below what households need on a daily basis.

NEDA claims that poverty fell due to higher incomes from wages and salaries especially among the poorest families.

IBON however pointed out, for instance, that the Php575.18 average daily basic pay of wage and salary workers in January 2018 is not even enough at 60% of the estimated Php955 National Capital Region family living wage at that time.

It should also be noted, said IBON, that the methodology of poverty and unemployment statistics obscures the real situation of poverty and unemployment.

The unrealistically low poverty threshold results in millions of Filipinos not being counted as poor.

Similarly, the definition of unemployment since 2005 results in millions of jobless Filipinos, including discouraged workers, not being counted as unemployed millions.

Rather than hyping supposedly on-track poverty reduction, the Duterte administration should count the real numbers of poor and unemployed Filipinos.

This is the only real basis for an effective strategy for poverty alleviation, said IBON.

The Filipino people deserve a comprehensive and broad-based poverty alleviation strategy that includes enabling the economy to create jobs, raise people’s incomes and livelihood, and increase economic production and capacity for consumption.

Government can embark on this instead of setting such a low poverty threshold and harping on reducing the number of poor just by changing the way they are counted, IBON said.

Lower official poverty estimates don’t mean less poor Filipinos — IBON

Research group IBON said lower reported official poverty estimates for the first semester of 2018 unfortunately do not necessarily mean that the country’s poverty situation is improving.

The group observed that standard of living allowed by the official poverty line is very low and grossly underestimates the real number of poor Filipinos.

Unless corrected, it gives a misleading picture of the conditions of millions of poor Filipinos and hinders the country’s anti-poverty efforts, IBON said.

The Philippine Statistics Authority (PSA) reported the proportion of supposedly poor Filipinos as falling to 21.0% in the first semester of 2018 or to just 23.1 million poor Filipinos.

This is a seemingly marked improvement from the reported 27.6% poverty incidence and 28.8 million poor Filipinos in the same period in 2015.

The proportion and number of poor families likewise also fell.

IBON observed however that the supposed improvement is based on a daily per capita poverty threshold averaging just some Php69.50 nationwide and a daily per capita subsistence or food threshold of only some Php48.60 in the first semester of 2018.

These are grossly underestimated thresholds that do not meet decent minimum standards for food, shelter, transportation, utilities, health care and education, the research group said.

The research group urged economic planners to review the official methodology in poverty estimation.

The subsistence and poverty thresholds are in dire need of updating and upgrading according to more decent standards, IBON said.

The PSA estimates the poverty threshold by first computing a subsistence or food threshold and then mechanically multiplying this by a factor of around 1.43 to get the poverty threshold.

These are both problematic, IBON added.

The subsistence food basket is estimated using so-called ‘least cost’ and ‘revealed preference’ approaches.

 These result in an extremely cheap food menu, which, while technically meeting bare nutritional requirements, is not just sorely lacking in variety but also only hypothetically available for families, IBON said.

The research group observed furthermore that the crude multiplier applied to calculate non-food items is also unacceptable.

This method does not calculate a budget for meeting families’ other needs for shelter, transportation, utilities, health care and education.

It is then unable to account for rising costs of housing, public transport, water, electricity, medical treatment and medicines, and schooling.

The research group pointed out that IBON estimates on Family Income and Expenditure (FIES) data in 2015 revealed that that the poorest 50% or 11.4 million families had monthly incomes of just Php15,000 or less and the poorest 60% or 13.6 million families just some Php18,000 or less.

These estimates at around those income levels would give a better picture of the real state of deprivation of tens of millions of Filipinos than current official poverty statistics, IBON said.

The choice of official poverty lines is a political one, IBON said.

Setting a high standard indicates the government having a high level of ambition for poverty eradication.

Conversely, setting a low standard indicates low targets for dealing with the poverty situation.

Government, however has chosen the latter, which results in tens of millions of Filipinos not meeting minimum standards of well-being and hidden behind unrealistic official poverty statistics, IBON concluded. #